Monday, July 23, 2007

Daily Herald takes a hit

My former employer, the Daily Herald, is feeling the deep pain that permeates the newspaper industryâ€”the nosedive of classified and display advertising and an evaporating readership base.

This trend is nothing new, of course, but the DH has been able to sidestep some of it the last two decades by moving quickly to gain market share in fast-growing suburbs.

But the hard reality is setting inâ€”even the Daily Herald must dramatically change its product or continue the slide. Daily Herald President/CEO Doug Ray spelled it out in a companywide memo last week (via Mike Miner) that included the news that pay raises would be frozen, salaries cut 5 percent across-the-board, and department budgets cut 10 percent.

As I said in my last operational update, the precipitous drop in advertising revenue has made this one of the most difficult years in some time.

In fact, the traditional display and classified advertising categories have fallen this year to levels not seen since our most difficult recessionary cycle. In past cyclical downturns, we have weathered the storm with temporary measures that reduced expenses, awaiting a return of business in the wake of economic recovery.

This situation is different and requires short-term expense reduction initiatives as well as long-term structural adjustments in the way we do business, which will position the company for the future.

Doug Ray hired me at the Daily Herald more than 20 years ago and I worked there nearly 10 years. During that time, the paper was growing rapidly. Its circulation was about 70,000 or so when I was hired and it is about 150,000 today. There are many fine people at the Herald and one of the attractions of working there was the company's fighting spirit and its nimble adjustments to market trends. For example, the paper was a nationwide leader in "zoning" its various editions to provide a tailored product to dozens of suburban population clusters.

That nimbleness might be an advantage for the paper as it heads quite literally into a fight for its life. Only those newspapers that thoroughly and rapidly reinvent themselves as internet products will likely make it. Here's hoping new Managing Editor Madeleine Doubek, Ray and others at the DH can pull it off.